How a treasure found its way from Afghanistan to Switzerland

Since the Taliban came to power a year and a half ago, the Afghan economy has collapsed, unemployment has exploded, women’s rights have been abolished and more than 22 million people are starving. The Bank for International Settlements (BIS) in Basel is unfazed by the misery. But what does the BIS have to do with Afghanistan?

What hardly anyone knows: the BIS has recently taken over the state treasury of Afghanistan, writes the “Tagesanzeiger”. There are about 3.2 billion francs in a BIS account – which actually belongs to the Afghan central bank and therefore belongs to the Afghan people.

An overview:

How it all started

When the Taliban came to power in Kabul in August 2021, the US blocked currency reserves of some $7 billion. The Afghan central bank deposits this money in America. Joe Biden’s government wants to prevent the Taliban from misusing the money, for example to buy weapons.

Since then, the Taliban have tried several times to lift the blockade, but in vain.

But it is not only the Taliban that want the money, America is also crying out for it: Victims of the terrorist attack on September 11, 2011 are demanding Afghan money in court as compensation. Two courts have dismissed their lawsuits. But the victims’ lawyers are continuing the case. The lawsuits enable Joe Biden’s administration to take action: at least part of the money should be diverted from resourceful American lawyers. On February 11, 2022, Biden issued a so-called Executive Order: About half, $3.5 billion, is now protected “for the needs of the Afghan people.” But Biden wants to take the money abroad. Namely in Switzerland, according to the “Tagesanzeiger”.

The solution: a foundation under Swiss law

The US Treasury Department contacted the Swiss State Secretariat for Economic Affairs (Seco) just weeks after seizing power in Kabul, writes the “Tagesanzeiger”. Washington’s request triggers a political-financial operation at the Federal Palace. An operation that has never existed before. A first meeting will take place on November 22, 2021. This will be followed by negotiations and clarifications, which will take almost a year. According to the “Tagesanzeiger”, five departments are involved in Bern.

On September 5, 2022, the solution will be in effect: the foundation “Fund for the Afghan People” will be registered in the Geneva Commercial Register. A private foundation under Swiss law. The purpose of the foundation is: “Preserving, protecting, preserving and spending assets for the benefit of the Afghan people.” The BIS has already announced that it will open an account for the new foundation. America transfers 3,200,000,000 francs.

However, the funds may not be used for humanitarian aid, but are reserved for classic central bank tasks. The goal is to be able to return the money to the bank one day.

Why Switzerland?

But why Switzerland? Switzerland has not only diplomatic, but also financial know-how, says a person familiar with the file in the federal government, compared to the “Tagesanzeiger”.

The money is now in Switzerland. And what now?

According to the articles of association, the board consists of four persons: Jay Shambaugha top US Treasury official, two exiled Afghan economists – the former Treasury Secretary Anwar ul-Haq Ahadi and the former central banker Shah Mohammed Mehrabi – as well as the Swiss diplomat Alexandra Bauman.

The problematic proximity of the central bank to the Taliban regime

The conditions for returning the money to the Afghan central bank are strict. The U.S. Treasury and State Department made this clear in a public statement in September 2022: Before the central bank can get its money back, it must prove its political independence from the Taliban and implement anti-money laundering and anti-money laundering controls. the financing of terrorism.

But at the moment that seems difficult. Because the Afghan central bank is “problematically close to the Taliban regime”, according to the Federal Ministry of Foreign Affairs (FDFA).

At the end of March, a new central bank governor was appointed – a man known as a longtime fundraiser for the Taliban and as their finance minister.

In the summer the money has to flow

So far no franc has been issued. However, the money has already yielded millions of francs in interest. Baumann hopes that the foundation will distribute the first funds by the summer, according to the “Tagesanzeiger”.

The foundation could pay off Afghanistan’s debts to international financial institutions, so that the country receives new aid in return. It could provide liquidity to the banking sector or stabilize the Afghan exchange rate. Or it can pay for critical inputs like electricity.

In Kabul, however, the new head of the central bank is making clear statements: he will respect the “orders and instructions given” by the Taliban government. He also did not forget about money abroad and will “continue their talks on the release of foreign exchange reserves and their rightful use until the desired results are achieved.”

(oo)